ExxonMobil CEO Darren Woods describes the impact of the Center East battle on the worldwide oil market on ‘Particular Report.’
If the escalating battle between Israel and Iran considerably cuts provide within the world oil market, costs might surge to as a lot as $120 a barrel attributable to a possible risk to a major delivery lane, in line with business consultants.
The value of West Texas Intermediate, a key crude oil benchmark, is sitting round a one-year excessive, whereas world benchmark Brent Crude is nearing a five-month excessive Wednesday because the battle between Israel and Iran enters its sixth day.
President Donald Trump met together with his nationwide safety staff Tuesday to debate the escalating battle, sparking hypothesis the U.S. may very well be making ready to affix the assault, creating extra volatility available in the market, in line with Ewa Manthey, commodities strategist at ING Monetary Service.
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Smoke billows for the second day from the Shahran oil depot, northwest of Tehran, June 16, 2025. (Getty Pictures / Getty Pictures)
However Manthey mentioned the “key fear for the market” is the potential for disruption to delivery by the Strait of Hormuz, a crucial waterway that connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. The waterway is just not solely large sufficient to deal with the world’s largest crude oil tankers. It’s thought-about one of many world’s most vital oil chokepoints, in line with the Power Data Administration (EIA).
ExxonMobil CEO Darren Woods echoed these issues, saying that whereas world oil provide is ample to resist a disruption to Iranian exports, the larger concern is the potential influence on oil shipments by that waterway, which strikes virtually a 3rd of world seaborne oil commerce.
A plume of heavy smoke rises from an oil refinery in southern Tehran after it was hit in an in a single day Israeli strike June 15, 2025. (Atta Kenare/AFP by way of Getty Pictures / Getty Pictures)
In 2024, 20 million barrels of oil per day, about 20% of world petroleum liquids consumption, flowed by the waterway. There are additionally only a few various choices to maneuver oil out of the strait whether it is closed, in line with the EIA.
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A major disruption to those flows could be sufficient to push costs to $120 per barrel, in line with Manthey. But when disruptions persist towards the top of the 12 months, she famous that Brent might commerce to new document highs, surpassing the document excessive of near $150 per barrel reached in 2008.
President Donald Trump despatched a letter to Iran’s Supreme Chief Ayatollah Ali Khamenei March 6, 2025, telling him to “make a deal” with the U.S. over its nuclear program or face the U.S. “militarily.” (Fox Information Picture utilizing Getty Pictures / Getty Pictures)
“If this happens, we would wish to see governments faucet into their strategic petroleum reserves,” Manthey mentioned, noting that it consists of the U.S., which sits on greater than 400 million barrels of crude oil in its strategic petroleum reserves.
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Manthey mentioned one other resolution could be if the Group of the Petroleum Exporting Nations (OPEC+) tapped into its spare manufacturing capability of greater than 5 million barrels per day.
“Whereas they’re within the strategy of bringing provide again on-line, a disruption to Iranian provide might immediate them to carry this provide again at a fair faster tempo,” Manthey mentioned.